Property insurance companies are taking vastly different approaches to their treatment of vacant property following the Covid-19 crisis and subsequent lock-downs.
Unless, commercial landlords are mindful about changes in policy conditions they may be exposed to significant losses due to vandalism, arson, squatting and theft at their sites.
As many employees are still being asked to work from home or furloughed, this leaves a significant number of commercial, industrial and warehouse facilities vacant. The impact upon the hospitality, leisure and retail sectors is well known with many hundreds of high street units unoccupied and mothballed – potentially for months.
All insurance policies contain unoccupancy conditions which need to be complied with if the property becomes vacant, but each insurer has a different definition of unoccupancy and the steps the property owner must take to fully comply with policy conditions.
3 Dimension Insurance, a specialist commercial property broker, has highlighted this differing approach by reviewing every insurance companies unoccupied property policies. For example, RSA normally don’t require the unoccupancy conditions to be complied with until the property has been vacant for 30 days. If however, any premises has had to be shut due to the government announcement, RSA will not enforce the provisions in the policy relating to Unoccupied Buildings. However, this approach contrasts with AXA which considers a property to be unoccupied once it has been empty for 30 days. This hasn’t changed and they will require notification after this period and the unoccupancy conditions will need to be complied with.
Complying with policy conditions under a ‘lock-down’ situation can also be a challenge. For example, where weekly inspections are required, these may not be possible for employees to undertake. Travel restrictions may be extended, or staff put in isolation. In this instance, using a specialist security contractor for empty property security would be necessary as their operatives are classed as ‘key workers’ and will not be subject to travel restrictions for inspections or alarm call-outs.
Deciding what security measures to mitigate risk at each site is also a challenge. Many companies are using plywood boarding to secure vulnerable glazing and window openings without considering specialist security options. Plywood is a poor choice for security as it is flammable, deteriorates when exposed to wet weather and prevents any light inside the building so creating a health and safety issue. Installation is generally simply Phillips wood screws which can be removed with ease.
Although policy conditions can require ‘boarding up’, professional anti-vandal security measures are available which allow both natural light penetration and ventilation to secured buildings. Bespoke cut on site to cover each vulnerable window opening, this high security steel sheeting is installed using unique anti-tamper fixings which cannot be removed with normal screwdrivers. Easy access is retained to each property through temporary steel security doors with five lever mortice locks.
Physical perimeter security may not always be required at all as sophisticated, temporary intruder and smoke alarms can be installed. Allowing mains power to be isolated, these wireless and battery powered alarms are monitored 24-hours with a fast response to activations and re-securing the property if required.
Landlords may need to act fast in meeting these insurance obligations. For example QBE Insurance has waived unoccupancy conditions during government restrictions but once these have been lifted, the empty property will be considered to be unoccupied after a further 7 days. So any new conditions must be implemented in this short timescale.
Keith Langton, Director at 3D Insurance says, ‘The principle of ‘Treating the Customer Fairly’ has been highlighted by the insurers and they will look kindly upon any cases where the virus has resulted in a period of unoccupancy’.
Simon Broadbent, CEO of Secure Empty Property says, ‘During the Covid-19 emergency, a specialist vacant property security contractor can make the difference between a property being safe and insured or landlords being exposed to significant potential losses’.